Roche & Genentech: Dan Zabrowski and James Sabry on Partnering Strategies and the Healthcare Reform Bill




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Video title: Roche & Genentech: Dan Zabrowski and James Sabry on Partnering Strategies and the Healthcare Reform Bill
Released on: August 11, 2010. © PharmaVentures Ltd
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In this episode of PharmaTelevision News Review, Fintan Walton talks with Dan Zabrowski, Head of Pharma Partnering at Roche, and James Sabry, VP Business Development at Genentech. Filmed at BioChicago 2010 in Chicago, USA, they discuss:

• Genentech's integration program

• Relationship between Roche and Chugai

• Role of Genentech partnering

• Genentech's focus on innovation and early stage discovery

• Impact of economic climate on partnering at Genentech

• Benefits of option deals

• Responsibilities and functions of Roche in partnering programs

• Genentech's perspective: Decision of acquisition in deals

• Are equity placements an important ingredient in deals?

• Early clinical vs late stage clinical deals

• Has Roche's partnering strategy altered as a result of US healthcare reforms?

• Genentech's perspective: Measures of success

• Roche's perspective: Measures of success

Genentech integration program
Fintan Walton:
Hello and welcome to PharmaTelevision News Review here at BIO International Convention. On this show I have Dan Zabrowski, who is Head of Partnering at Roche and James Sabry , who is Head of Partnering at Genentech , welcome to the show both of you.
Dan Zabrowski :
Thank you for having us.
James Sabry :
Thank you.
Fintan Walton:
So Dan Zabrowski, we were talking this time last year in Atlanta and we had Joe McCracken next to you now we've got James sitting there as Head of Genentech Partnering. So Dan just give us an update of what's happened in the last year because obviously a year ago you were just completing the acquisition of Genentech [PharmaDeals ID = 30853] the integration program a lots happened in the last year tell us what's your perspective is now?
Dan Zabrowski :
Okay, well actually last year at BIO in Atlanta it was really the first time that we introduced the collaboration model that we have since employed between the two partnering organizations and during and as a result of that collaboration model we have not competed for deals, we have a very good dialogue that is ongoing between both of the partnering organizations on potential deal flow and we've also have been able to engage both of our R&D organizations and really have them embrace the collaboration model as well.
Relationship between Roche and Chugai
Fintan Walton:
So in terms of the execution of something like that it's obviously for large corporations it's difficult you are a global company and you work with your other partner in Japan which is Chugai [PharmaDeals ID = 9458] as well, so just taking it from a global perspective Dan how is relationship between yourselves and Chugai for example?
Dan Zabrowski :
Well in that relationship it's different than the relationship that we have with our colleagues in Genentech Partnering. We are the majority shareholders of Chugai but our relationship with them is at an arm's length which means that Chugai is free to independently pursue deals and you know they are able to do that independent of us.
Role of Genentech partnering
Fintan Walton:
Right. So James , you are in the job just about five weeks I believe?
James Sabry :
That's correct, yes.
Fintan Walton:
And heading of Genentech Partnering obviously is a very important part of the whole development of Genentech here in the US, how is it so far?
James Sabry :
It's been spectacular, I mean one thing people don't realize is that Genentech Partnering has always been a strong organization, over half of the assets we have now that are in research and development have come from partners. So there is a rich history of partnering at Genentech and with the reorganization that Dan Zabrowski mentioned with Genentech becoming now focused on research and early development my mandate now is discover the world for good science to bring into Genentech into that research and early development by that I mean Phase I and Phase II and then to then go into a common committee you know common committee there is a Roche committee for late stage development where it goes into a common model regardless where it comes from within Roche, so it sounds spectacular so far, as far I can see it.
Genentech's focus on innovation and early stage discovery
Fintan Walton:
So the focus James then as you said is an early stage discovery, early presumably up to clinical, up to proof of concept?
James Sabry :
That's correct, in fact Genentech has always had a history of innovation and drugs like Herceptin and Avastin have really change the world of the way for patients and certainly as Genentech continues to focus on its innovation. One thing I mentioned yesterday is we were at the Genentech booth and there was a patient that came up to us who is 12-years old little girl who is going to her first prom on Saturday and she said to us you know it wasn't for you guys I won't be alive. Her mother told me that she have been on drug called Pulmozyme which one was one of the first Genentech products and with the great deal of pride I could say to her you know what that company that made that drug is still alive, is now part of a larger organization called Roche, but that focus on innovative products hasn't changed and we continue to be dedicated to people like you, to people who are actually are you know acclaimed to these products to build innovative products to allow you to continue forward. It was really touching moment at a time when we were normally thinking of deals and deal structures and these kinds of things to realize why we are really here.
Fintan Walton:
I think sometimes when and particularly when you work in a large corporation you know that you are trying to help patients ultimately in the end, but when it actually something comes up to it's just that.
James Sabry :
When they walk up to you, yes spectacular.
Impact of economic climate on partnering at Genentech
Fintan Walton:
That's absolutely amazing. Now you've talked about how Genentech 's history has been in innovation and in particularly in partnerships, clearly in the last couple of years it's been tough for biotech companies, so the companies that you may want to partner with, the companies that themselves are innovative, what sort of impact has the last couple of years had on partnering for your organization with Genentech ?
James Sabry :
We see this is a great opportunity getting involved earlier in companies because as you pointed out the capital markets have been so contracted, companies now are in need of capital at an earlier stage in development than they were say 5 or 10 years ago, and I came from that background of mine, background before coming to partnering was as a CEO of a small and then public traded biotech company so I know what's like to be in those shoes, and it's harder now than it was 5 or 10-years ago. This Genentech is a company that's focused on good science, it's focused on partnering the best science into the organization to eventually feed into this common Roche commercial development and commercial organization can now partner with people effectively earlier on at a point when the past they won't consider partnerships. So we see this is a tremendous opportunity to bring all the world's great science into Genentech to decide as Dan pointed out earlier whether the asset belongs best at Genentech or best at Roche and make that proper decision for that overall business and then go ahead and execute the deal.
Benefits of option deals
Fintan Walton:
You know clearly large corporations like Roche are involved in doing numbers of deals, what's important for Roche obviously is their ability to get access to a broader range of technologies, so companies are starting to do more option deals, is that something you are seeing happening at Roche?
Dan Zabrowski :
Yes absolutely, we did it an option deal with Artery [PharmaDeals ID = 35045] they announced at the beginning of this year. And actually I would agree with James , I think it's actually it's in our best interest and it's actually the biotech companies best interest to partner early. The nice thing about an option deal is that allows both the large company as well biotech to be able to profit from the success scenario.
Responsibilities and functions of Roche in partnering programs
Fintan Walton:
So then in the way you are organized at the moment you've got, you break your partnering programs down into therapeutic focus, could you just describe how that actually works functionally for us Dan?
Dan Zabrowski :
Well we have an organization that has many responsibilities in addition to supporting the licensing needs of the pharma research and early development organization we also have a we refer to as a strategic partnering group which really looks at the types of deals and like an option deal or M&A for the Roche group. In addition to that we have responsibility for the late stage development pipeline and innovation going directly into that pipeline as well as alliance management and also asset management which is the divestment of our tail end marketed products. So for us the key to success is working very closely with our scientific community and it's we have the same philosophy as James and his organization. What we want to do from the very beginning when we look at an interesting opportunity is t o bring our scientists in allow them to evaluate it and also grow comfortable with the technology or the project so that they become a champion for it, because then as we bring it in to the organization we now have a person who is gonna fight for that project, who is gonna work through the issues, who is gonna make it give it his best chance to be successful.
Fintan Walton:
And that's important in an organization, large organization to have champions?
Dan Zabrowski :
Absolutely, as a matter of fact if you look for example that combined number of clinical stage deals that both companies have done since 2004, 60% of them are actually still in our R&D portfolio. And I think in large part that's because of the fact that we have internal champions and they treat the innovation from a partner no differently than they would treat a project that was discovered in our own labs.
Genentech's perspective: decision of acquisition in deals
Fintan Walton:
Sure, James we can turn to you, just talked to Dan a little bit about options which is one end of the spectrum the other end of the spectrum in terms of doing the deals is actually acquiring a company, so from a Genentech perspective I mean obviously there are lots of innovative companies out there you are focused at the very early stages of development and discovery in early stage development, well lot of those companies are platform based companies which have you know specific platforms and may have an enabling technology or it can give rise to a larger group of potential products, when would decision to acquire a company come to you?
James Sabry :
The decision to acquire a company is really a decision around what business structure is best for the science and medicine that the company actually has. And so our approach has been to be creative around the business structure so it actually fits with whatever the business and science needs of that company are in lined with what Genentech and eventually Roche would be of interest. So it's not driven by necessarily specifically a particularly company who needs to be acquired or wants to be acquired as much as it is, is that an option that works well for the science, the medicine and then the specific products is something that historically Genentech has not done a lot of, our goal is to be creative at the business structure in a way that is equally creative as the scientists are about their science in order to do what is best for Genentech and eventually best for the company too.
Is equity placements an important ingredient in deals?
Fintan Walton:
Right, another component is sometimes expected by some of the biotech companies is some sort of equity placement, you've got Roche Ventures which is based in Basel and do you work closely on that? Is that an important ingredient to doing deals?
James Sabry :
It's not a required ingredient equity components as part of an upfront payment are common and it is something we have done, something we will continue to do again if it makes sense for us and makes sense for the company, that equity component is something that can be part of the upfront mix, it allows us to take a bit of an ownership stake in the company but it's not required.
Early clinical vs late stage clinical deals
Fintan Walton:
Okay. So Dan , going back to your responsibilities, because ultimately you are responsible for the partnering section which is at the late stage clinical development the very part where the pipeline is studied, pipeline is critically assessed by any pharmaceutical analyst in Wall Street or in London, so what is the climate like for trying to do deals at that stage?
Dan Zabrowski :
Well actually I would say still our bread and butter is doing early clinical stage or late preclinical stage deals. And again going back to James's point about the fact that you want to work very closely early with the innovator of the technology be at the table with them and be able to actually move that project through our R&D pipeline is really critical. And if you are really focused on first in class compounds by definition you are in a very heated race and any time that you lose through transition is actually a potential loss of being first in class. We also do look at compounds in the later stage pipeline. I would say though that for the most part we are very selective and very opportunistic about opportunities that may come up and really I think try to stay more focused on the earlier stage compounds.
Has Roche's partnering strategy altered as a result of US healthcare reforms?
Fintan Walton:
Right, and in terms of the general economic climate for pharmaceutical companies these days there has been big healthcare reform here in the US for example, so what one is the has your partnering strategy altered in any way as a result of the healthcare reforms that have are going through here in the US?
Dan Zabrowski :
No not at all, actually I would say you know from a corporate perspective I mean we are a very strong believer of an innovation strategy we think that's the way to succeed. We are not going to diversify into over the counter or generics. And we believe that good medicine is good business, if we find compounds that are first in class and they really truly make a step change in medicine then we think we are going to be rewarded appropriately and we are gonna be successful.
Genentech's perspective : measure of success
Fintan Walton:
Okay. So James , clearly you are new in the job, going forward looking at your responsibilities over the next few years, how do you judge your own success? How you are going to recognize how you've performed in terms of your position?
James Sabry :
There are number of ways of assessing how productive the group is and how successful it is. One way of course you just look at the number of deals we do so there is an execution component that it's simply a number. I think more important is actually the impact of those deals of those deals what has been the impact of the products that we brought into Genentech , how many of them are now in late stage development at Roche and how are they changing the landscape for patients, and what is the argument for their reimburse ability in a marketplace and those things are little harder to measure but one thing we were gonna be interested in measuring over the long run to see just how important partnering is to the overall business of Genentech and Roche as an ongoing pharmaceutical company.
Roche's perspective : measurement of success
Fintan Walton:
And Dan , from your perspective how would you measure your success?
Dan Zabrowski :
How many medicines we bring to the marketplace that actually change patient life's and save patient life's it's really that simple. Deals are just a metric and enabler to make that happen, but at the end of the day it's really all about doing what's right for the patient.
James Sabry :
It's about having those patients come up here in the booth and saying thank you for saving my life.
Dan Zabrowski :
Exactly.
James Sabry :
Yes.
Fintan Walton:
Well that's a powerful statement. Dan and James , thank you very much indeed for coming on the show.
James Sabry :
Thank you.
Dan Zabrowski :
Thank you very much.
Fintan Walton
Dr Walton is the Founder and CEO of PharmaTelevision. After completing his doctoral research on the genetics of cell proliferation at the University of Michigan (US) and Trinity College (Dublin, Ireland), Dr Walton gained broad commercial experience in biotechnology in management positions at Bass and Celltech plc (1982-1992).
Dan Zabrowski
Head
Dan Zabrowski has been the Head of Pharma Partnering since July 2007. His team is dedicated to finding the best external innovation to strengthen the Roche R&D portfolio. Dan Zabrowski has previously worked at Roche Pharma HQ, Switzerland as Global Head, Drug Regulatory Affairs and Vice President, Drug Regulatory Affairs at Roche Pharma, USA.
James Sabry
Vice President
James Sabry is the Vice President of Genentech Partnering. Prior to this, he was President and CEO of Arete Therapeutics as well as Chairman of the Board of Directors and former CEO of Cytokinetics, a company he co-founded in August 1997. James Sabry is a former member of Dean's Council of the Kennedy School of Government at Harvard University and serves on the advisory board of the California Institute of Quantitative Biosciences. James Sabry received an M.D. from Queen's University and a Ph.D. in Neuroscience from the University of California, San Francisco.
PharmaVentures
PharmaVentures is a corporate finance and transactions advisory firm that has served hundreds of clients worldwide in relation to their strategic deal making in the pharmaceutical, life science and healthcare sectors. Our key offerings include: Transactions / deal negotiations; Product / technology valuations; Deal term advice; Due diligence & expert reports; Strategy formulation; Alliance management; and Expert opinion for litigation/arbitration cases. PharmaVentures provides the global expertise to ensure our clients generate the highest possible return on investment from all their deal making activities. We have experience of all therapeutic areas and can offer advice on both product and technology commercialization.
Roche
Roche plays a pioneering role in healthcare. As an innovator of products and services for the early detection, prevention, diagnosis and treatment of diseases, Roche contributes on a broad range of fronts to improving people's health and quality of life. Roche is providing the first products that are tailored to the needs of specific patient groups. Roche is the world leader in in-vitro diagnostics and drugs for cancer, transplantation, and active in other major therapeutic areas with a high medical need such as autoimmune diseases, inflammatory diseases, virology, metabolic disorders and diseases of the central nervous system.
Genentech
Genentech has been delivering on the promise of biotechnology for more than 30 years, using human genetic information to discover, develop, manufacture and commercialize medicines to treat patients with serious or life-threatening medical conditions. Today, Genentech is among the world's leading biotech companies, with multiple products on the market for serious or life-threatening medical conditions, more than 100 projects in the pipeline and a long term plan for growth. In March 2009, Genentech became a wholly owned member of the Roche Group. As part of their merger agreement, Roche and Genentech combined their pharmaceutical operations in the United States. Genentech 's South San Francisco campus now serves as the headquarters for Roche pharmaceutical operations in the United States. Genentech Research and Early Development operate as an independent center within Roche.